First Quarter 2020 Tactical Thoughts - Hobson Wealth Partners
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First Quarter 2020 Tactical Thoughts
The first quarter of 2020 was not an easy one. While
there were warning signs that we were in the late stages Key Highlights
of the economic cycle, nobody could have predicted the
− Extremely challenging first
severity of the impact that coronavirus has had across
quarter as markets struggle
New Zealand and the globe. As markets moved to reflect
to deal with the Covid-19
the rapidly developing situation, equities fell sharply,
outbreak.
with the worst returns coming in March.
The S&P/NZX 50 Gross Index fell -14.8% over the quarter − In the face of heightened
but outperformed many other major markets including volatility, asset allocation
the US, Europe and Australia. From record highs in mid- remains a key tenet to long
February, the market quickly turned as the scale of the term wealth creation.
Covid-19 outbreak began to be felt outside of China. − When the virus passes, the
Australian equites fell -20.7% in March and -23.1% for world will have changed
the quarter. As March progressed investors increasingly significantly. We provide a
formed the view that Covid-19 would have a dramatic glimpse of some changes.
impact on the economic outlook. All ASX 200 sectors
declined in March. The best performing sectors were
Consumer Staples, Health Care and Utilities while Real Estate was not as defensive as investors
had hoped.
The Dow Jones Industrial Index suffered its worst quarter since the 1987 crash, and one of the
worst first quarters in its history as the US struggled to contain outbreaks particularly in the New
York region. A very substantial fiscal stimulus package was agreed, worth over 10% of GDP,
which managed to buoy sentiment as market volatility spiked to levels not seen since the GFC.
In the face of a severe liquidity crunch, the package aimed to provide credit backed by the US
Federal Reserve to investment grade companies.
Central bankers have thrown the kitchen sink at coronavirus, cutting rates to their lower bounds,
and have restarted asset purchase programmes of massive quantum. The Fed’s commitment to
purchase as many government bonds as necessary is a substantial step, which should keep
government borrowing costs low, despite the massive fiscal stimulus that is required to deal
with the economic consequences.
The oil price war between Saudi Arabia and Russia in late February did not help equity market
sentiment. Oil suffered its worst month ever in March (-54%) and its worst quarter in history,
losing almost two thirds of its value from the start of the year. Beyond geo-political tensions, oil
was also dragged from the expectations of lower global demand, as global economies began
shuttering. Not all commodities were negatively impacted though and gold has seen a decent
rally driven by central bank policy easing and safe-haven buying.
European and UK equities fell sharply in March as news emerged that the spread of the Covid-
19 virus was accelerating across the continent in particularly Italy and Spain. Investors sold
shares driven by fears of an impending global recession as governments began implementing
extreme containment measures to limit the spread of the virus. Bank stocks in particular fell on
fears of a prolonged economic downturn. The pain was exacerbated when the European Central
1 of 12Bank (ECB) asked banks to suspend all dividends and buybacks until at least October in order to
conserve precious capital.
Asian equity markets were weaker too amid the widening spread of Covid-19. Concerns grew
about the outlook for global growth with an alarming rise of infections outside of China. Supply
chains were impacted as the number of industrial shutdowns increased. In the second half of
March, central banks stepped up with notable monetary and fiscal stimulus to counter the
ensuing economic slowdown. This helped ease market fears and drove a mild recovery towards
month end. Mainland equities were down on the month, but outperformed the region as China
seems to have emerged from the darkest days of the epidemic. A renewal in economic activity
was seen following an easing of restrictions.
One does not need to wait for traditional economic data to be released to appreciate the scale
of the hit to the global economy, which has been magnified by lockdown measures. Central
banks have responded with an unprecedented and co-ordinated policy response. In New
Zealand, the Government announced a massive stimulus package equating to at least 4% of GDP
to provide support across all aspects of the economy adversely impacted by the pandemic.
Given the uncertain outlook, we believe an underweight to equities and an overweight to fixed
interest makes sense. Our local equity market has held up better than many others, and if it
continues to do so we recommend potentially trimming holdings of lower quality companies.
With central bank and government support, better capitalised companies will be more resilient,
and we believe a selective approach to both bonds and equities is prudent at this time. We
continue to see merit in owning solid cashflow backed businesses and expect gentailers, gold
and defensive equities to hold up better in these challenging times.
While it is very difficult to make predictions at this time we would like to focus on the positives.
Interest rates are now essentially at zero. The Reserve Bank has committed to keeping them low
for at least the next 12 months if not longer and is buying bonds to ensure they stay low. Banks
have reduced deposit and mortgage lending rates and so far seem to be bending over backwards
to help affected customers. This in conjunction with the government providing enormous fiscal
stimulus by putting money directly into people’s pockets to mitigate the impact of reduced
incomes.
This is a crisis but one that collectively we know we will get through and on the other side this
dramatic and brutal challenge to business models is expected to result in significant
consolidation in certain sectors, but also changes in behaviour that will be for the better. Given
the hit to the global economy and uncertainty over how soon we can start to dig our way out of
it, it is tough to be strategically bullish risk assets in a meaningful manner. We also are of the
view that it is hard to adopt the playbook of previous crises, so keeping some powder dry is
prudent.
A sustainable recovery in equity markets is unlikely until there are signs that the pandemic is
under control, especially in the US. Numbers in the US have yet to peak, and a more stringent
testing regime will be needed. Only after we see a peak, will volatility likely recede that will then
allow for a recovery to begin. Unfortunately, this all seems some way off in our view.
We wish you an enjoyable Easter with those in your bubble and please stay safe.
2 of 12Recommended Tactical Asset
Allocation
Underweight Overweight
Asset Class Tactical Rationale
NZ Equities While we are encouraged by NZ’s lockdown efforts,
we stay cautiously Neutral. We see further volatility
ahead and pullbacks as potential opportunities to add.
Australian We see a full lockdown as inevitable in Australia and
Equities with superannuation funds scrambling to meet
redemptions, we have cut our call to Underweight.
US Large Cap US$ strength has buoyed returns to NZ$ investors.
Equities Many US large caps should be resilient through this
period, but clients may look to trim to boost cash.
US Small Cap US small caps have fared worse from Covid-19 than
Equities large caps and we believe this will continue until US
cases peak. We go to full Underweight.
Developed World Developed markets particularly in Europe are facing a
Equities dire situation due to Covid-19. We drop our rating
from Neutral to Underweight.
EM Equities EM equities have been hurt by the strong US$. China
has held up well as it looks to have made it through
the Covid-19 storm, and thus we remain Neutral.
NZ Listed While low rates will benefit listed property, working
Property from home and lockdowns may have profound
implications for the sector.
Fixed Interest While Fixed Interest has not been as liquid as we
would like, we continue to seek its defensive
properties and recommend high quality issuers.
Cash We upweight Cash to build reserves to take advantage
of future opportunities.
3 of 12Market Price Earnings ratios
Price Earnings ratios 2015 – 2020*
Price/Earnings ratios are Bloomberg Best estimates for forecast year one.
Price Earnings ratios versus average*
NZ Australian US Large US Small Developed EM
Price Earnings*
Equities Equities Cap Equities Cap Equities World Equities
As at 31 March 24.5 14.6 16.6 22.9 13.2 11.5
10-year average 18.5 15.1 16.5 25.0 13.9 11.9
5-year average 21.0 16.2 18.1 26.8 14.8 12.6
*Price Earnings ratios are Bloomberg Best estimates for forecast year one.
NZ$ FX performance percentage returns to 31 March 2020
Currency Pair 1m 3m 6m 12m
NZ$/ US$ -4.6% -11.6% -4.9% -12.5%
NZ$/ AU$ 1.3% 1.2% 4.7% 1.3%
Source: Eikon, Bloomberg, March 2020.
4 of 12Index Returns to 31 March 2020
Index percentage returns in their currency
Asset Class Index 1m 3m 6m 12m
NZ Equities S&P/NZX 50 Gross NZ$ -13.0 -14.8 -10.3 -0.5
Australian Equities S&P/ASX Accumulation 200 AU$ -20.7 -23.1 -22.6 -14.4
US Large Cap Equities Russell 1000 Total Return US$ -13.2 -20.2 -13.0 -8.0
US Small Cap Equities Russell 2000 Total Return US$ -21.7 -30.6 -23.7 -24.0
Developed World Equities MSCI EAFE* US$ -13.8 -23.4 -17.5 -16.8
EM Equities MSCI EM* US$ -15.6 -23.9 -15.2 -19.8
NZ Listed Property S&P/NZX Property Gross NZ$ -20.7 -20.4 -20.9 -3.7
Fixed Interest S&P/NZX Corporate A NZ$ -0.8 1.2 0.0 4.2
Cash ANZ New Zealand Call Rate NZ$ 0.1 0.2 0.5 1.2
Source: Eikon, Bloomberg, March 2020 (*not total return index).
Index percentage returns translated into NZ$
Asset Class Index 1m 3m 6m 12m
NZ Equities S&P/NZX 50 Gross -13.0 -14.8 -10.3 -0.5
Australian Equities S&P/ASX Accumulation 200 -21.6 -24.0 -26.1 -15.5
US Large Cap Equities Russell 1000 Total Return -8.8 -9.3 -8.2 5.6
US Small Cap Equities Russell 2000 Total Return -17.8 -21.1 -19.5 -12.7
Developed World Equities MSCI EAFE* -9.5 -12.9 -12.9 -4.5
EM Equities MSCI EM* -11.3 -13.4 -10.5 -7.9
NZ Listed Property S&P/NZX All Real Estate -20.7 -20.4 -20.9 -3.7
Fixed Interest S&P/NZX Corporate A -0.8 1.2 0.0 4.2
Cash ANZ New Zealand Call Rate 0.1 0.2 0.5 1.2
Source: Eikon, Bloomberg, March 2020 (*not total return index).
Interest Rate and FX Forecasts as at 31 March 2020
Rate 1Q2020A 2Q2020E 3Q2020E 4Q2020E 1Q2021E
Australia Cash Rate 0.25 0.25 0.25 0.25 0.25
Australia 10yr govt 0.80 0.85 0.90 0.90 0.95
US Fed Funds Rate 0.75 0.00 0.00 0.00 0.00
US 10yr Treasury 0.55 0.55 0.75 1.00 1.00
NZD OCR 0.25 0.25 0.25 0.25 0.25
NZ 10yr Govt 1.00 1.00 1.05 1.10 1.15
NZ$/ US$ 0.540 0.510 0.540 0.560 0.570
AU$/ US$ 0.550 0.530 0.550 0.580 0.600
NZ$/ AU$ 0.9818 0.9623 0.9818 0.9655 0.9500
EUR/ US$ 1.050 1.050 1.100 1.090 1.080
US$/ JPY 107.0 103.0 105.0 107.0 105.0
GBP/ US$ 1.150 1.180 1.220 1.250 1.250
Source; Macquarie Securities, March 2020.
5 of 12Market Outlook and
Portfolio Positioning
New Zealand equities
The New Zealand share market (NZX50) had its worst calendar month return ever in March, a
fall of -13.0%, eclipsing June 2008, the worst month during the GFC, where the market fell by -
11.8%. The NZX50 was down as much as -24.5% in late March before rallying into the end of the
month. Obviously, everyone is aware of the severity of the coronavirus outbreak, but there still
remains considerable uncertainty as to the virus’s trajectory and the ongoing economic
consequences, both current and future.
During the month, the New Zealand Government announced a $12.1b fiscal package which
included $5.1 billion in wage subsidies for affected businesses. The wage subsidies initially came
with a cap but that was subsequently removed, potentially injecting a further $4 billion into the
economy. The Reserve Bank of New Zealand (RBNZ) cut the Official Cash Rate (OCR) by an
unprecedented 0.75% to 0.25% and stated that at the OCR will remain at this historically low
level for at least 12 months. It also effectively introduced quantitative easing with the
implementation of the $30 billion Large Scale Asset Purchase Programme, signalling it will be
buying New Zealand Government bonds of all maturities.
Tactical Positioning
The lockdown in response to the coronavirus outbreak has delivered a severe shock to the New
Zealand economy. The collapse in corporate profits is likely to be broadly spread across all major
sectors. Companies’ ability to pay out dividends during these unprecedented times may be
materially impacted. We have already seen the likes of those in the travel and tourism sector
cut dividends, but the Reserve Bank took the pre-emptive step to shore up the domestic
economy by enacting measures that local banks cannot pay dividends until we get through this.
We expect this trend to continue while the country battles the outbreak.
We are encouraged by New Zealand’s isolation efforts and see our economy as one of the first
out of lockdown. As a result, we are optimistic about domestically focussed businesses at
current prices, but see further volatility ahead and opportunities to add. We think the market
could rally in relation to a better than expected virus outcome but view that as an opportunity
to lighten up, building up cash for what we see as a protracted economic downturn for at least
the next six months. As a result, we are Neutral at this time.
Australian equities
The March quarter was the worst quarter on record for the benchmark Australian ASX 200.
Australian equities fell -21.5% in March alone and -24.4% for the first quarter, wrapping up the
biggest quarterly loss in the index’s 20-year history. Australian equities proved they were
considerably more volatile than their New Zealand cousins, as six trading days in March were
among the worst 20 down days since 1980. An increasing number of companies now are
withdrawing prior guidance in response because they cannot estimate how long a shutdown
may last or the impact on their business.
The RBA and Australian Government have responded with significant firepower, amounting to
A$320bn (~16% of GDP). Subsequent to the RBA’s historically unprecedented rate cut from
0.75% to 0.25% and the introduction of a quantitative easing program, the Australian
government has since introduced two fiscal packages, carrying a wide array of supportive
6 of 12arsenal for households and businesses, including loan guarantees, wage subsidies and
superannuation access allowances, with additional measures expected to be announced in the
coming weeks.
Tactical Positioning
We expect Australian GDP to suffer materially in 2Q20 due to the significant restrictions in place
across most states. Unemployment is also likely to spike in the coming weeks too. We think
corporate Australia’s earnings downgrade cycle has further to go. So far the estimated
contraction is in the magnitude of high single digits, but this looks light in a global context. An
extended economic shutdown and widespread equity raisings that we are seeing more of are
additional factors that could further reduce earnings per share.
We expect volatility to persist and with more downgrades likely coming, we see a growing risk
of downward moves in stock prices. We therefore maintain our call to stay Underweight the
Australian equity market.
One of the few saving graces is the unexpected relative strength of the New Zealand Dollar
against the Australian dollar. The Kiwi dollar hit parity intraday on March 18th, and has been
particularly strong especially compared to long run averages. We do think this offers a window
for new money to invest in Australia at an opportune time, but conversely less attractive for
clients bringing funds back to New Zealand. For those that do want to invest in Australia, share
prices of many listed stocks have fallen out of favour, and may offer a number of compelling
opportunities at prices that may reward long-term holders over time.
International equities (excluding Australia)
US equities
The longest-ever bull market in US history ended abruptly in March with declines so sharp that
rarely used mechanisms to halt trading were activated by exchanges on a number of days. The
S&P 500 recorded its biggest quarterly decline since 2008 with the Dow Jones Industrial Average
having its worst period of performance since 1987.
The US government and the Federal Reserve intervened to help restore calm. In an emergency
move the Fed slashed US interest rates close to zero, provided short-term lending support and
boosted the flow of US dollars around the word. The US Senate passed a US$2 trillion
coronavirus aid bill - the largest economic stimulus in US history. The plan includes direct
payments of US$1,200 to most American adults and aid to help small businesses pay workers.
As well as US$350 billion in loans for small firms, a US$500 billion fund was set aside to help
larger companies, including loans to hard-hit sectors such as airlines.
The measures provided a degree of support to US equity markets as they regained some lost
ground during the final week of the quarter although trading conditions remained volatile as the
number of new Covid-19 infections in the US and Europe continued to rise.
7 of 12Tactical Positioning
We are encouraged by US policy makers’ aggressive moves to provide monetary and fiscal
stimulus in the wake of such an economic and social shock. However efforts to control the
coronavirus outbreak in the US have sadly been underwhelming. Testing has been limited and
only once this becomes widespread can they be on a path to contain the pandemic.
From clients’ perspective we are fortunate that safe haven demand and firming up funding lines
has driven huge demand for US dollars. The NZ dollar weakened materially over the quarter so
from a domestic investor here, returns from US equities do not look as bad.
Our outlook assumes a reacceleration of the global economy later this year, and a rebound in
global EPS in 2021. We stay constructive on US equities though we continue to have a strong
preference for large caps over small caps. Technology stocks have been remarkably resilient
through this and the benchmark index, the Nasdaq was actually up for the quarter in NZ$ terms.
For clients looking for liquidity we believe the strong US dollar presents an opportunity to lighten
up some of their exposure, but for others we continue to believe the US remains the preferred
quality trade.
Developed World equities
The MSCI World Index of Developed Markets excluding the United States was down -23.9% for
the first quarter. Outside of China, Europe was the first major region to be affected by the
coronavirus and the markets have born the brunt of this so far. The region remains in dangerous
territory with most countries following Italy’s footsteps, and issuing nationwide lockdowns in
varying degrees of severity.
The UK equity market also suffered significant losses, and the index posted its biggest quarterly
fall for more than three decades as the economic costs of the global health pandemic continued
to mount. Defensive sectors such as utilities, consumer staples and health care held up better
than more cyclical areas of the market with consumer discretionary stocks, financials, industrials
and real estate seeing the biggest falls.
Japan’s equity market ended March and the quarter lower as the Government announced that
the Tokyo Summer Olympics had been officially postponed, with the games now scheduled for
July 2021. It looked more likely that Japan would fall into a recession and the country has begun
steps to instigate full lockdowns in the key metropolitan areas. The Bank of Japan issued an
emergency statement stating the Bank 'will strive to provide ample liquidity and ensure stability
in financial markets through appropriate market operations’ together with increased asset
purchases.
Tactical Positioning
We believe Europe may not be as affected as China because the composition of GDP is weighted
more towards services, which is less exposed to supply chain disruptions and allows for
companies to implement work-from-home strategies. Secondly, the European Union is quickly
responding with income support and liquidity to ensure that job losses and business failures are
minimised. Neither of these steps will prevent a large contraction in the second quarter but once
case numbers plateau and then fall away, they should help initiate a recovery later in the year.
As we go to press this month, Boris Johnson, the UK Prime Minister, is in hospital with the
coronavirus. While we wish him a speedy recovery, we are extremely cautious on the UK at this
time. A key indicator of sentiment, the British Pound has already fallen reflecting this new
uncertainty, but this is in addition to all the unknowns related to Brexit.
8 of 12The Japanese Government finally made the tough decision to delay the Tokyo Olympics until
next year. This had been a significant beacon for the country and market sentiment and without
this we are cautious. In the last week, the Abe government, has declared state of emergencies
in the most populated Tokyo and Osaka regions as the country braces to deal with the outbreak
in a more sustained manner.
Although the ECB and Bank of Japan has more firepower to help contain financial stress in the
short term, many market participants believe further measures may still be required. As
countries across Europe struggle to contain the spread and Japan has only now admitted that
the outbreak might be more severe than initially indicated, we move to full Underweight
Developed Markets.
Emerging Market equities
Emerging equity markets fell sharply over the quarter in anticipation of a global recession as the
spread of Covid-19 intensified. While remedial measures to contain the virus weighed heavily
on economic activity, governments responded with stimulus packages to cushion the impact.
Interest rates were also lowered in several countries.
India was one of the weakest performing equity markets in Asia along with Indonesia and the
Philippines. In the biggest isolation effort to date, India locked down 1.3 billion on 25 March and
on the following day announced a US$23 billion stimulus plan to help the poor impacted by the
travel restrictions.
Wuhan in China was ground zero for the coronavirus but the Government initiated tough
containment measures which now seems to have paid off and the rest of the world is striving to
replicate. As a result, equity losses in China were less severe than many other countries as
officials have begun to lift restrictions in the Hubei province. Chinese manufacturing activity
rebounded strongly in March with sentiment surveys showing a big improvement from the
previous month.
Oil prices recorded a historic decline as Saudi Arabia and Russia sparked a major selloff after by
failing to agree on the level of production cuts. The collapse in commodity prices, led by the 55%
drop in Brent crude, was particularly felt in Latin America as equity markets registered their
biggest monthly losses in March since 1998. The Brazilian equity market lost almost half its value
during the March quarter in US$ terms, given its heavy composition of energy stocks.
Tactical Positioning
The global macro-economic backdrop is improving thanks to a large coordinated stimulus
package and hopefully an imminent peak in virus numbers. But at this point, this outlook only
applies for Developed Markets. Emerging Markets are in a much weaker spot. This quarter has
been characterised by fund outflows and EM currencies remain under pressure.
Emerging markets particularly those outside of Asia are worse placed, because the virus impact
took longer to be felt there and because the health systems are less well equipped to deal with
the pandemic. Furthermore, fiscal and monetary headroom is much more limited.
We fear we will see an escalation in infections across Emerging Markets, but these must first
stabilise before we can be bullish. Sadly we see this as some way off. Over the long term we are
constructive on the opportunity set and recommend retaining some exposure, hence
recommend a Neutral weighting. Within EM we favour Asia, in particular China.
9 of 12New Zealand listed property
Domestic listed property much like the broader equity market has had a very challenging first
quarter in 2020. The S&P/NZX All Real Estate was down -20.4% which has essentially unwound
any gains made in the sector over the last 12 months. The lasting impacts of this global pandemic
are still unknown, but note it is clear the pandemic will have a material impact on the sector’s
forward performance and rental receipts. It is too early to quantify the impact of disruption on
future income, asset values and cash flows. Kiwi Property Group has already suspended its final
dividend and we think this prudent capital management is likely to be consistent across the
sector.
Tactical Positioning
We move to an Underweight recommendation for New Zealand listed property. While low rates
will benefit listed property, working from home and lockdowns may have profound implications
for the sector.
Fixed Interest and cash
It has been the worst performing quarter for credit markets since the global financial crisis as
concerns around corporate defaults intensified and markets weighed up the full impact of Covid-
19. Even assets such as gold and government bonds no longer worked as expected. Fixed income
markets broke down and liquidity evaporated. This resulted in record selling as asset managers
were forced to liquidate their most liquid positions to satisfy redemptions, which in fixed income
markets equates to government bonds. So even the safe-haven of government debt no longer
existed due to relentless selling pressure which pushed government bond yields higher and
prices lower.
Exacerbating these moves, were the rumours of large sovereign wealth funds redeeming into
an illiquid market added further dislocation. Corporate bonds exhibit less liquidity than
government bonds, so to say that liquidity was challenging in our market would be an
understatement. To highlight this, which was also well documented in Australian newspapers,
fixed income asset managers considerably widened their sell spreads. This was to compensate
for the significant widening of bid/offer costs in the underlying corporate and government bond
markets.
This broad dislocation in asset markets forced central banks and governments to intervene.
Locally the RBNZ announced large scale asset purchases of both government and council bonds
to help inject liquidity into the system and attempt to restore confidence to financial markets.
At the time of writing, this has had an immediate impact for government debt but liquidity and
pricing environment for corporate debt remains challenging.
Tactical Positioning
We move to a Moderately Overweight tactical position in Fixed Interest. Whilst the events of
the last month have been unnerving, we now believe the yields being offered on high quality
corporate names due to significant credit spread widening, are such that they offer excellent
medium to long term value in what is a historically low interest rate environment.
As for cash, while we see no meaningful return on cash holdings due to effective zero interest
rates, we upweight cash to build reserves to take advantage of future opportunities.
10 of 12Hobson’s Corner
Glimpses of a post-pandemic future
Ed Glennie - Investment Strategist
Never has it been clearer how interconnected our world was until the Covid-19 crisis hit. The
globalisation of modern business and travel has meant that Covid-19 has become the most
disruptive event we collectively face since World War II.
I read an interesting report this week from Citi Research that looked across all major industries
to explore what impact Covid-19 has had, and its potential forward impact. Citi identified
companies and themes which may be well-placed against this backdrop, and those less well
placed.
Key themes referred to were:
• Crisis as a catalyst for consolidation and restructuring: the dramatic and brutal challenge to
business models is expected to result in significant consolidation in certain sectors, as poorly
capitalised companies struggle to survive or are forced to raise capital.
• Focus on ‘working from home’: investors have been starkly reminded of the underpinnings
of such phenomena as e-commerce, telehealth, digital leisure, video gaming, remote office
productivity, data centres, cloud business models, etc, within the more recent lens of
‘working from home’.
• Existing ‘mega-trends’ likely see acceleration: automation across industrial sectors, digital
banking, shift from physical to online consumption including food and product delivery
services.
• Ethical, Social and Governance (ESG) engagement priorities likely to shift: in the short-run,
many investors are trying to understand how to prevent a short shock from turning into
permanent damage; focus to shift to employment and benefits, deferring liabilities, direct
assistance etc. Longer-term, the bar is likely raised for risk management overall; implications
for offshore supply chains in high social utility key sectors such as food and medicine
production; as well as labour practices and policies.
If you would like further insight in some of the shorter and longer term implications and what
this means for investors, please don’t hesitate to reach out to your advisor.
11 of 12General Disclaimers
This document has been distributed in confidence to New Zealand resident clients of Hobson Wealth Partners Limited (Hobson Wealth). Hobson
Wealth is an NZX Trading and Advising Participant, an Individual Clearing and Depository Participant, as well as a registered financial services provider
(L17, 88 Shortland Street, Auckland, New Zealand). Macquarie Group Limited (MGL) holds an interest in Hobson Wealth and provides certain business
and research services to Hobson Wealth and there is also a security distribution agreement in place between MGL and Hobson Wealth. However,
Hobson Wealth is not a wholly owned subsidiary of MGL, operates separately to MGL, and Hobson Wealth liabilities do not represent liabilities of MGL.
The disclosure statements for Hobson Wealth and your adviser are available free of charge by contacting us on 0800 742 737. Any materials
disseminated contain market commentary and factual information or class advice only. They are not research. Nothing in these documents shall be
construed as a solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any transaction. The information in this
presentation does not take account of any particular person’s objectives, financial situation or needs. Before acting on this information, investors
should therefore consider the appropriateness of the information having regard to their situation. We recommend investors obtain financial, legal and
taxation advice before making any financial investment decision. The views contained in this document may not constitute the views of the Macquarie
Group. While we believe the information to be accurate and any recommendations to have reasonable basis, no warranty is made as to the accuracy
or reliability thereof. There are risks involved in securities trading. The price of securities can and does fluctuate and an individual security may even
become valueless. International investors are reminded of the additional risks inherent in international investments, such as currency fluctuations and
international stock market or economic conditions, which may adversely affect the value of the investment. The forecasts are predictive in character
and therefore investors should not place undue reliance on the forecast information. Whilst every effort has been taken to ensure that the assumptions
on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and
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Level 4, Australis Nathan Level 2, Suite 6, The Vault Level 12, Deloitte Building Level 3
37 Galway Street 53 Spring Street 20 Customhouse Quay 151 Cambridge Terrace
Auckland 1010 Tauranga 3110 Wellington 6011 Christchurch 8013
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